We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
No Brainer?
Sean91
Posts: 16 Forumite
Hi Guys,
So my partner has around 5k worth of debts which consist of credit cards store cards and a bank loan.
The credit card is also about to come out of the interest free period, The debts would currently take around 38 months to clear..
Now she has 10k in savings, what I have told her to do is pay of everything with 5k of her savings and treat it as a sort of consolidation loan paying back whatever it costs from what she saves in monthly outgoings whilst also saving on interest.
Is this a good idea or am I missing something?
Thanks
So my partner has around 5k worth of debts which consist of credit cards store cards and a bank loan.
The credit card is also about to come out of the interest free period, The debts would currently take around 38 months to clear..
Now she has 10k in savings, what I have told her to do is pay of everything with 5k of her savings and treat it as a sort of consolidation loan paying back whatever it costs from what she saves in monthly outgoings whilst also saving on interest.
Is this a good idea or am I missing something?
Thanks
0
Comments
-
Yes, she's going to pay more interest on the debts than she makes from the savings account.
She should pay them off0 -
Yes I agree. If the debts can be cleared in one hit and she will still have 5k savings seems a sensible plan. I second - the interest charged on debt will be greater than the interest paid on the savings.0
-
Another here who agrees. Get her to overhaul her budget though, and it wouldn't be a bad idea to set up a regular monthly transfer to her savings account to make sure the money DOES go back there rather than risking it just getting frittered.
Oh - and tell her to cut up the cards and close the storecard account as well. And next time she wants to buy something, save for it...
🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
Balance as at 31/08/25 = £ 95,450.00
£100k barrier broken 1/4/25SOA CALCULATOR (for DFW newbies): SOA Calculatorshe/her0 -
Get straight with the debts by using the savings, then make sure that she stays debt free, if she's built up savings while using credit she sounds as though this won't be a problem. Good luckNo.79 save £12k in 2020. Total end May £11610
Annual target £240000 -
It would not be a consolidation loan. It would just mean her committed payments were lower. Of course her savings would be temporarily be lower too. However, if she can afford the payments and now adds the money she was paying to her savings. She will build them up again. If she can't she should adjust the payments. What is important with savings is to do it on pay day.Hi Guys,
So my partner has around 5k worth of debts which consist of credit cards store cards and a bank loan.
The credit card is also about to come out of the interest free period, The debts would currently take around 38 months to clear..
Now she has 10k in savings, what I have told her to do is pay of everything with 5k of her savings and treat it as a sort of consolidation loan paying back whatever it costs from what she saves in monthly outgoings whilst also saving on interest.
Is this a good idea or am I missing something?
ThanksPaid off the last of my unsecured debts in 2016. Then saved up and bought a property. Current aim is to pay off my mortgage as early as possible. Currently over paying every month. Mortgage due to be paid off in 2036 hoping to get it paid off much earlier. Set up my own bespoke spreadsheet to manage my money.0 -
It would not be a consolidation loan. It would just mean her committed payments were lower. Of course her savings would be temporarily be lower too. However, if she can afford the payments and now adds the money she was paying to her savings. She will build them up again. If she can't she should adjust the payments. What is important with savings is to do it on pay day.
Op knows all that!0 -
Yes you are right. It makes no sense to have savings and debt although if on 0% it may be worth keeping the money in a savings account until the deal expires to get the interest.
She can direct the money she was putting towards debt into savings then.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
Click on this link for a Statement of Accounts that can be posted on the DebtFree Wannabe board: https://lemonfool.co.uk/financecalculators/soa.php
The 365 Day 1p Challenge 2025 #1 £667.95/£472.78
Save £12k in 2025 #1 £12000/£124500
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.2K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.9K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards